At first I thought it was an issue with my 'Asus WL100-G' and the b43legacy
driver. After the last kernel update my system doesn't crash anymore after
removing the pcmcia card but still no go when using a hidden ESSID. Network is
fine when I 'unhide' the ESSID.
I'm not using madwifi btw, so this is plain F8 stuff.

scratch that. since knetworkmanager is now a link to nm-applet....i had to use
gconf-editor to clear out all the remembered wifi networks.....then wpa started
working. BUT, I still can't connect to a hidden network, whether the network
has wep, wpa, or nothing, i still cant connect.
Ideally, knetworkmanager should be brought back (since I use kde). Otherwise, I
find NM to be much more stable than in fc7.

I've successfully used ipw2200 with hidden networks; can you see if a straight
wpa_supplicant config will connect for you using ap_scan=2?
WRT atheros, it has in the past needed ap_scan=1. But that is not going to be
special-cased because now that ath5k is in the upstream kernel, it will use
whatever settings the mac80211 stack uses (and all other mac80211-based
drivers). Drivers fundamentally _need_ to support ap_scan=2; ap_scan=1 +
scan_ssid=1 is an optimization of ap_scan=2 that some drivers just cannot support.
hidden SSID support is highly driver dependent and drivers need to get better
before it gets usably better for everyone, even without NetworkManager involved.

Thanks alot Dan! That worked fine for me.
In my /etc/wpa_supplicant/wpa_supplicant.conf file I put the following
ap_scan=2
network={
...
scan_ssid=1
}
and it worked fine after a restart of the services.
Thanks!!!

NetworkManager-0.7.0-0.6.7.svn3235.fc8 has been pushed to the Fedora 8 testing repository. If problems still persist, please make note of it in this bug report.
If you want to test the update, you can install it with
su -c 'yum --enablerepo=updates-testing update NetworkManager'

Using NetworkManager-0.7.0-0.6.7.svn3235.fc8 and kernel-2.6.23.13-105.fc8, the
connection is established nicely! Good work, guys!
However, NM does not seem able to automatically reconnect to the hidden network
after boot. I have to re-add the hidden network manually. This is probably a
different issue. It could be a regression in NM(?) I think this was fixed way
back, but I cant remember all the details.

Ok, so it should have the capability. Can you paste in the lines from
/var/log/messages where NM starts up? It should look something like:
NetworkManager: <info> eth1: Device is fully-supported using driver 'ipw2200'.
NetworkManager: <info> eth1: driver supports SSID scans (scan_capa 0x21).
NetworkManager: <info> Now managing wireless (802.11) device 'eth1'.

Does NetworkManager on the other machine report anything about SSID scan
capability when it starts up? If that message isn't in the logs, it likely
won't work. You'll need NetworkManager-0.7.0-0.6.7.svn3235 or later, which was
pushed to F8-updates on 2008-01-22. Try updating a bit later today.

Yeah, something got screwed up in update repo generation, and that's being
corrected as I type this, hence the "try updating a bit later today." When you
see 3235 hit the repos, any mac80211-based, ipw2200, hostap, or libertas drivers
should work better with hidden SSIDs for you.